Saudi non-oil private sector registered soild improvement in its business activity during February with firms reporting a surge in production and new factory orders compared to last month, said a report.

The Saudi Arabia purchasing managers’ index (PMI) compiled by Saudi British Bank (SABB) and HSBC pointed to a further improvement in operating conditions at non-oil producing private sector companies in the Kingdom.

The headline PMI posted 58.5, up from 58.1 in January, said the SABB monthly report.

The PMI reflects the economic performance of the Saudi non-oil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment.

According to the report, the Kingdom's non-oil sector witnessed solid growth in factory output, while new orders remained solid and employment levels continued to rise. Meanwhile, purchasing activity increased at a sharp rate, it added.

Non-oil producing private sector firms in Saudi reported both higher output and increased new orders in February, said the SABB monthly report.

While the rise in output was mainly driven by more new business and improving market conditions, the rise in new orders was attributed to marketing and sales efforts within companies. Moreover, the rate of growth in new work was sharp and higher than in the previous survey period, it added.

According to February PMI report, the new export orders continued to increase. "Employment levels at non-oil producing private sector firms rose further during the month. According to anecdotal evidence, new business was the main reason for an increase in payroll numbers," it stated.

Backlogs of work at non-oil producing private sector firms in Saudi increased during February. While the rate at which backlogged work accumulated was only slight, survey data signaled the first increase in work-in-hand since October 2012.

Meanwhile, the SABB monthly report witnessed continued improvement in suppliers’ delivery times, but at the weakest rate in 11 months.

Increased input costs were commonly mentioned by companies that reported a rise in output prices, it said.

According to Feb PMI, the overall input prices rose during February, and the rate of input cost inflation was broadly unchanged from January.

Around 11 per cent of companies recorded higher input costs, while only 2 per cent reported a fall. The rate of purchase price inflation picked up, while the wage inflation fell to a 16-month low, the datat said.

Purchasing activity increased during the latest survey period in Saudi Arabia’s non-oil producing private sector with around 35 per cent of panellists reporting an increase in quantity of items purchased, while less than 9 per cent indicated a fall.

The SABB monthly report said the stocks of purchases too witnessed a surge.

"The rate of growth was broadly unchanged from January and remained above the series average. There was some evidence that expectations of more new business partly led to the accumulation of stocks of purchases," it added.